It is a long march, but progress is being made against corruption
The Economist | NEW YORK
CONGRESSMEN working late into the summer nights to overhaul America’s system of financial regulation were surprised when Bono started lobbying them. Yet the rocker-cum-campaigner helped to insert a far-reaching change into the legislation they were drafting. It has nothing directly to do with America’s financial mess, but it will push forward the fight against corruption in the developing world, a cause which has made some much-needed progress recently.
The bipartisan amendment to the Dodd-Frank act requires every oil, gas and mining firm listed on an American stock exchange to disclose in detail all the payments it makes to governments. It is the biggest success yet for the “publish what you pay” campaign, a global coalition of anti-corruption groups. It aims to reduce corruption by increasing transparency. The idea is that politicians and officials will think twice about filling their pockets with money from foreign firms if the public knows of the existence of such payments.
The campaign is now trying to get other countries to adopt similar rules. It is focusing its efforts on Britain and Hong Kong, an autonomous region of China, which has already introduced such rules for newly listed firms, but not existing ones. In Britain the newish coalition government is making encouraging noises. Stock markets in America, Britain and Hong Kong represent almost all of the world’s publicly listed oil, gas and mining companies.
The push for “publish what you pay” is only one of several recent changes. More data are being produced that will make it easier to judge the extent of corruption in different countries. They supplement the Corruption Perception Index of Transparency International (TI), whose latest edition again shows that the war on corruption is far from won (seearticle). Next year will see not just the newly mandated disclosures in America but also lots of useful data from the Extractive Industries Transparency Initiative, another anti-corruption coalition, and from the International Budget Partnership, an advocacy group. Its Open Budget Survey Index, released on October 19th, found that of 94 countries surveyed, 74 failed to meet basic standards of budget transparency.
Efforts are also being stepped up to punish companies that pay bribes. For years America was the only country that took this seriously, and even its record was patchy. It has sharply increased both enforcement and the severity of punishments. Most developed countries also seem committed to punishing corruption, having signed a charter drawn up by the OECD, a club of rich democracies.
Yet opinions differ on whether enough is being done. Only going after the directors of firms found guilty of corruption will lead to real improvement, argues Mo Ibrahim, an African telecoms billionaire who is supporting better governance in the continent through his philanthropy. Peter Eigen, the founder of TI, is more optimistic. Germany and Britain, which were previously rather lax, have started to prosecute offenders, he points out. On October 26th a British court jailed the former executive of an insurance company for almost two years for having made nearly $2m in illicit payments to officials in Costa Rica.
International development banks also seem to be shedding their traditional indifference to corruption—not least because they want to get new money from donor countries. This is particularly true for the World Bank, thanks largely to the efforts of Ngozi Okonjo-Iweala, a managing director, who made her name fighting corruption as Nigeria’s finance minister. The bank is cleaning up its lending through third-party reviews of where the money goes. So far this year it has banned 45 contractors found guilty of bribery from bidding for contracts paid for with the bank’s money.
The World Bank is even making progress in the “delicate task of stolen-asset recovery”, in the words of Ms Okonjo-Iweala. For instance, it is working behind the scenes with the governments of Switzerland and Haiti to recover money stolen by a former Haitian dictator, “Baby Doc” Duvalier. And it has just launched the Corruption Hunter Network to provide support for people engaged in the war on corruption. “It’s a lonely job. I would have liked a support network when I was in Nigeria,” says Ms Okonjo-Iweala.
Yet, in the end, none of these efforts will succeed unless citizens support them. The final reason for optimism is that in a growing number of developing countries, local corruption hunters are becoming more visible. They range from official bodies, such as the Kenyan Anti-Corruption Commission, to grassroots organisations such as Muhari (Muslims for Human Rights), based in Mombasa. It monitors the use of the $1m given to each member of parliament annually to hand out in grants.
Such groups need more support, something anti-corruption activists are belatedly starting to realise. “The whole anti-corruption movement was so much focused on imposing on the elite of developing countries a commitment to fight corruption and giving them the tools and systems to fight it”, says Mr Eigen. “But what is also needed is grassroots demand.” The question now is how long it will take for that demand to grow strong enough to elicit the desired supply-side response.
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